So, what’s an S-Corp? Does it make sense for your company? Do you need an advanced accounting degree to figure it out?
First off, an S-Corp isn’t a different kind of entity than a typical corporation (the C-Corp), it’s just a tax election. That is, structure, operation, even legal formation documents could be exactly the same regardless of which type of corporation you are (though you’d probably want to tailor your Articles of Organization, but that’s a different post). The point is, legally, both entities are exactly the same. When you become an S-Corp, that just means that you meet certain qualifications and make a filing with the IRS so that you’re taxed differently.
As such, before you can understand what makes an S-Corp special, you have to understand how a regular C-Corp is taxed. You have to understand the concept of double taxation. [Read more…]